Skyrocketing gasoline prices. Exploding home prices and rents. Escalating food costs. Inflationary trends have dominated the thoughts of most people for the past two years. 

Sometimes citizens make a plaintive outcry for the government to do something, anything, to ease suffering. It’s ironic, though, to ask government to manage out-of-control prices when government interference is the cause of the problem.

The price of a product is a function of supply and demand. Consumers have a desire to acquire a product, and producers manufacture a supply to meet demand. The equilibrium market price of a product is the price at which quantity supplied equals quantity demanded. 

What happens when this equilibrium is disrupted? What are the causes of the disruption?

The United States national debt approaches $31 trillion. The U.S. doesn’t have enough money to pay its bills. Unlike private citizens, the government can print money. These newly minted dollars are added to the economy as fiat money — the face value of the printed money far exceeds its commodity value.

Writing for the Foundation for Economic Education, Dan Sanchez noted the extra printed money enables customers to bid up the prices charged by their suppliers, who in turn use the extra money to bid up the prices charged by their suppliers. This is how new money raises prices across the board, although unevenly, as it circulates through the economy. 

Some in the Biden administration  accused producers of taking advantage of product shortages and supply chain constraints by excessively raising prices. As Sanchez put it: “Blaming rising prices on profit seeking is like blaming a plane crash on gravity.”

Businesses can’t stay in business without making a profit, a well-established fact. Why are business profits deemed excessive? Actions taken by the federal government set the stage to disrupt the free market and directly affect prices. 

For example:

Stifling the oil and natural gas industry with punitive ideological policies and moving the U.S. from a net exporter to a major importer.

Forcing businesses to shut down in the COVID-19 pandemic, in turn disrupting supply chains.

Destroying commodities due to a lack of available truckers to transport goods.

Paying workers more to stay home, creating a labor shortage throughout the economy.

Printing money to compensate for extraordinary deficit spending.                                                                  

The Consumer Price Index released June 10 reflected an 8.6 percent increase over the past year in the price of a basket of consumer goods a typical household buys. 

Brad Polumbo, policy correspondent with the Foundation for Economic Education, noted that producer prices rose 10.8 percent. Producers aren’t gouging consumers.

Government spokespersons never acknowledge facts or truthfully answer the question, “Who created this problem?” The financial health of the United States and its citizens is on the line. Free markets strangled by government interference equals rising prices.